5/04/2009 @ 12:00AM

NFL Economics

Last weekend marked the 30th anniversary of ESPN’s coverage of the National Football League draft. While most look at the draft for what it is–the division of top college football talent among vying NFL teams–in the latest round there were also economic lessons about the folly of anti-trust, the subsidization of the unsuccessful and, most heartening, the happy reality that is trickle-down economics.

Indeed, the very fact that the draft is televised today speaks to the folly of governments that use anti-trust laws to weaken the firms it deems too strong. Back when cable TV was just an afterthought, ESPN requested television rights, and NFL executives thought its representatives were mad. Who in their right mind would want to watch a non-football football event that showcased team executives talking on their phones?

But as Austrian economist Joseph Schumpeter long ago noted, entrepreneurs disrupt, and the fledgling network that was ESPN saw what its better-capitalized network television competitors did not. It turns out Americans had a great deal of interest in watching their favorite NFL teams select players, and ESPN proceeded to ride out its quirky content purchase–with which the all-powerful networks couldn’t be bothered–to become the most prominent name in sports.

Anti-trust law is rooted in the assumption that powerful business entities will keep out new competitors if their rise is unchecked, but ESPN’s ascent from weakling to sports behemoth proves that the present is a faulty predictor of the future. ESPN was ultimately bought by ABC-owner Capital Cities, which was then bought by
Disney
, and now the once insignificant sports network is generally considered Disney’s most valuable property. What’s perhaps more exciting for sports fans is the certainty that there exists an unknown competitor in our midst intent on knocking ESPN from its lofty perch.

The same concept applies to players picked last week in the draft. When he signed with Penn State out of high school, wide receiver Derrick Williams was generally considered the top football recruit in the nation. Last weekend, Williams was taken in the third round by the Detroit Lions.

Getting drafted in the third round is nothing to sniff at, but consider Texas Tech wideout Michael Crabtree. Crabtree was generally considered the best receiver in the draft, and he was taken with the 10th overall pick by the San Francisco ’49ers. What’s interesting is that Crabtree was an unheralded recruit while in high school, and someone that football powers such as Penn State likely never considered offering a scholarship to. But as history regularly reminds us, the present tells us very little about the future. Be they powerful companies or players, it’s very hard to stay on top forever.

Conversely, politicians regularly seek to elevate the downtrodden or, in particular, the small. There’s even a federal agency (U.S. Small Business Administration) dedicated to providing small companies with financial assistance so that they can grow large. What politicians forget is that being an underdog is its own motivational reward.

Take, for instance, Green Bay Packer draftee Clay Matthews III. Though Matthews is heir to an impressive NFL lineage going back two generations–which includes Hall of Fame uncle Bruce Matthews–there was no rational reason to assume that he would follow in the footsteps of his uncle, father and grandfather. During his junior year of high school, Matthews weighed only 166 pounds and was his team’s backup linebacker.

And while Matthews grew into a bigger and better player his senior year, there was very little interest in his services on the collegiate level, particularly from his dad’s powerhouse alma mater, University of Southern California. Matthews accepted USC’s offer to try out for the team as a walk-on. As his position coach Ken Norton Jr. recently told Sports Illustrated, far from being an afterthought, Matthews “wasn’t even a thought!”

But what Norton and no one else properly accounted for is the intense desire within the underrated to prove their worth. Indeed, given a chance to play in a USC blowout victory his freshman year, Matthews waved off the coaches in order to maintain four more years of eligibility. And despite not becoming a starter until the fourth game of his senior season, Matthews took the limited opportunities that came his way and emerged a first-round draft pick. Conversely, Rey Maualuga, Matthew’s teammate and fellow linebacker, lasted until the second round, despite arriving at USC as the No. 1 recruit at his position in the nation.

Perhaps most inspiring, however, is the story of Michael Oher, the first-round pick of the Baltimore Ravens. Elite opinion frequently decries the notion of trickle-down economics; merely the suggestion that the gains of the rich frequently end up benefiting those who are not so rich. But Oher’s story might change the tune of some.

Oher is one of 13 children of a crack addict mother and a father whose murder he found out about months after graduating from high school. Accepted as a special needs student into the Briarcrest Christian School in Memphis, Tenn., Oher was passed by well-to-do Briarcrest parents Sean and Leigh Anne Tuohy during a Thanksgiving break while waiting at a bus stop, in the snow, dressed in a t-shirt and shorts. Seeing the down-and-out Oher, Leigh Anne started crying, demanded that her husband turn around and pick him up, and soon enough, the Tuohy family invited Oher into their home for good.

According to author Michael Lewis’ bestselling account of his life story, The Blind Side, until moving in with the Tuohys, Oher never had his own bed, no one had ever read him a book and, as USA Today recounted, when Leigh Anne told him she loved him at age 18, that was the first time “anyone ever uttered those words to him.” During interviews leading up to the draft, Oher acknowledged that he wouldn’t have been a top pro prospect–let alone alive–absent the help of the Tuohys.

Ultimately, the 2009 NFL draft generated excitement for those rabid fans who cheered and jeered the picks that will shape the future of their favorite teams. But as economics is at its core a behavioral science, the ’09 draft was also an economics lesson for reminding us that best and worst is a fluid concept, while wealth generation is frequently compassionate beyond the basic truth that under capitalism, producers succeed for giving us what we want.

John Tamny, editor of RealClearMarkets, is a senior economic adviser to H.C. Wainwright Economics and to Toreador Research and Trading. He writes a weekly column for Forbes.